Hoymiles’ way to success: Many a little makes a mickle
Author: Zhang Shaohua, Procurement Director
It has been 6 years since I joined Hoymiles in September 2016. During these years, I have gone through 3 stages together with Hoymiles, including the stages of customer accumulation, high growth, and explosive business growth. I also witnessed those important moments of Hoymiles. Its annual business volume increased from only a few tens of thousands to a million units, representing leapfrog growth. And it succeeded in getting listed on the Sci-Tech Innovation Board (STAR Market) and became the leading enterprise in the domestic microinverter industry. Next, let’s take a look at a procurement guy’s story with Hoymiles!
Stage 1: Customer Accumulation (2016 – 2017)
During this period, Hoymiles only recorded an annual order volume of less than 100,000 and did not have much working capital. The main problems I faced as a member of the Procurement Department included insufficient order volume, demand variability, and troubles caused by the suppliers who would not cooperate. Such problems were especially common in the orders for some customized components. As each order usually required only a few hundred or a few thousand components, the suppliers sometimes lost money for producing them, let alone making a lot of profits. And over time, the suppliers would be unwilling to take any more similar orders. In 2017, one supplier from Shaoxing reneged on agreements several times and failed to deliver the transformers that were needed by our company’s modular inverter. When I came to the supplier’s place for expediting, I found that it was running near full capacity, with many other companies’ procurement officers on site for similar purposes. Compared with other companies’ huge orders for over 100,000 pieces that would be allocated to 6 bases, Hoymiles’ order on components with different specifications only reached around 5,000 in total. The supplier would also tend to prioritize the needs of big customers. But I did not give up. With consistent efforts in communication for a couple of days, I managed to persuade the supplier to hurry through some urgently-needed products for Hoymiles.
Stage 2: High Growth (2018 – 2020)
During this period, the annual order volume of Hoymiles first reached 100,000 and gradually increased to about 300,000. In the meantime, Hoymiles also introduced strategic investments of RMB 180 million. However, such volume was still relatively small. Besides, other factors also brought Hoymiles some challenges, such as the phasing-out PV subsidies in the domestic market, the impact of the COVID-19 pandemic, etc. In 2018, the company leaders took precautions to optimize and change the supply chain, such as developing and introducing alternative suppliers and materials of good quality, phasing out some suppliers who no longer had an edge in terms of price, quality, and delivery period, negotiating on the price of materials to reduce costs, removing obsolete materials, conducting stock control, etc. These actions proved to be effective. The costs of materials that I was in charge of were reduced by 9.27% in 2018 and 5.417% in 2019. Regardless of the impact caused by negative factors, such as the increasing prices of raw materials that include copper, aluminum, organic silicon, etc., the costs of materials that I was in charge of were still reduced by 3.27% in 2020. Meanwhile, the quality of raw materials greatly improved, with the delivery period shortened a lot as well.
Such achievements were never made overnight. Rather, they required constant effort. For example, from 2018 to 2019, Hoymiles had some difficulties regarding the negotiation on prices with some regular suppliers. To break the deadlock, the procurement team of Hoymiles applied some techniques such as long-term negotiation, collaborative strategies, peer competition, etc. Moreover, the leaders offered guidance or even got personally involved in the business negotiation, which finally helped Hoymiles overcome the challenges. Since the outbreak of the COVID-19 pandemic in early 2020, many suppliers were having a backlog of orders due to late work resumption. Right after the work resumption in April 2020, we went to Shenzhen to expedite the production. We also took a draw-bar trolley with us and used it to bring back a large box of urgently-needed components. Besides, developing and introducing new suppliers were not easy. In many cases, searching for a suitable supplier is just like finding a marriage partner. Most manufacturing enterprises needed to meet the evaluation standards given by the R&D Department, the Quality Department, and the Procurement Department. As the suppliers of customized components might not fully understand the company’s concerns about processes and product quality, they would still need some on-site guidance and follow-up improvement after their cooperation with Hoymiles was first established. My daily workload therefore increased a lot, and more business trips were involved. Although I often could not go home until 8 or 9 o’clock at night, I still enjoyed devoting myself to such work.
Stage 3: Explosive Business Growth (2021 – now)
During this period, Hoymiles’ annual order volume crossed the 500,000 and 1 million marks in succession, which represented explosive business growth. In the meantime, new projects on energy storage inverters, RDSs, and optimizers were also carried out in full swing. The supply chain of Hoymiles also faced serious challenges, which were mainly caused by the following reasons: 1. The problem between Hoymiles’ explosive growth in terms of demand and some suppliers’ saturated capacity that was hard to expand in a short period was prominent; 2. The repeated resurgence of the COVID-19 pandemic in China and abroad caused frequent lockdowns and shutdowns, which greatly hit the whole industry chain; 3. The tensions in Europe disrupted some logistics channels, which negatively impacted the raw material supply; and 4. Pandemic lockdowns in Hangzhou caused the courier service to be shut down. Delivery vans from high-risk areas were stopped at the highway exits. During this period, other procurement team members and I were all exhausted because the lack of any chip or label could lead to a business shutdown. In addition to urging the suppliers to speed up the production during the daytime, we also sent call reminders and tracked the package status at night. If possible, we would request the suppliers to deliver the goods to a neighboring city, and then get them delivered to Hoymiles.
During this period, two events were really impressive to me. The first one happened in 2021 when I went to an electrolytic capacitor factory in Dongguan. The flight delay caused by thunderstorms stranded me on the way to expediting them even after 2 o’clock in the morning. The second one happened in 2022 when the COVID-19 pandemic hit Shanghai. During that period, the delivery vans from Shanghai were stopped at the Banshan toll station. After getting the pass with the help of the executive, I tried to communicate with the officers who were in charge of epidemic prevention and control. Thanks to the joint effort of the executive and the Development and Reform Commission, they finally let the delivery vans pass. Manager Zhou and warehouse staff also waited for the delivery vans until midnight. They were so well-organized that they managed to unload and disinfect 20 pallets of potting of smidahk overnight. There are notable examples like this. Thanks to the close collaboration among different departments, even when Hoymiles was almost fully trapped by the pandemic around May 2022, the production was never shut down. However, many major domestic manufacturers had to shut down due to the pandemic or other problems that occurred in the supply chain. This could be regarded as a miracle in the history of Hoymiles’ development. Of course, the supply chain optimization and reforms conducted during the previous three years also played a significant role. Hoymiles’ supply chain overcame the challenges and kept improving regardless of the ever-changing global economic climate.
I also enhanced my abilities and gained self-improvement during these events. I became increasingly skilled in conducting business negotiations and dealing with emergencies. If Hoymiles can be compared to a sophisticated microinverter, I would be like a small oscillator on it. Although just an ordinary part, it is always precise, reliable, and hard-working. No pain, no gain. Several years of hard work also won me recognition from the company and the leaders. In 2017 and 2018, I was voted as the outstanding employee of Hoymiles. In 2021, I also got the excellent service award. Our department was awarded the outstanding team honor in the same year, with all members getting a great salary increase. One other thing worth mentioning is that I was so lucky to be the winner of the grand prize in Hoymiles’ annual meeting lucky draw in 2019. The president awarded me a Huawei smartphone as the prize. A great surprise, right?
In the near future, there will be more miracles and more surprises! So guys, just go for it!